Phone cos can still find subscribers in cities

As telecom firms in India set out to tap subscribers from small towns and rural areas, urban metros may still hold opportunity, mostly for newcomers.

A survey by The Nielsen Company, telecom research firm, conducted over 12,500 subscribers in eight Tier I cities, says that new telecom providers stand a good chance of building a sizeable subscriber base quickly in the metros.

“There is huge opportunity for new telecom operators in metros. Their networks are empty and state-of-the-art. Moreover, we found that the dissatisfaction with existing service providers is immense, as 12% of subscribers in the metros are looking to switch over to another service provider once the mobile number portability (MNP) policy come into force,” said Shankari Panchapakesan, executive director, telecom practice group, The Nielsen Company.

MNP allows a subscriber to retain the mobile phone number while changing service providers.

In January 2008, six new telecom firms — Unitech, Swan, Shyam Sistema, Aircel, Datacom and Loop — received licenses to offer telecom services in the country.

For long, most incumbent telecom firms in the country have been saying that the
metros and large urban areas are nearing saturation in terms of subscriber base. Today, the average penetration by telecom operators in metros such as Mumbai or Delhi is around 80%.

“Today the duration for which a subscriber remains connected to a service provider is, on an average, 24 to 26 months. Even this is on the decline, indicating the level of dissatisfaction of subscribers,” added Panchapakesan.

According to the survey, subscribers, both in the urban and rural areas, look at aspects such as call drop rate and coverage area to stay loyal to a telecom service provider more than competitive pricing, which most telecom providers are currently engaged in.

The survey, carried out in August last year, says “42% of Indian subscribers rate network performance as very important for selecting their mobile operator. In fact, with 34% of votes, network-driven choice is ahead of price-driven choice. After initial selection, satisfaction with network performance is the single most important driver for shaping overall satisfaction with the operator. Over 50% of the variation in satisfaction levels across operators is determined by the variation in their network performance.”